Oldest Allies, Guarded Friends: The United States and France since 1940

To balance out the perspective, it should be recognized that the macroeconomic philosophy of the two democracies was very different. France was accustomed to a rather large umbrella of social protection from public funds. For example, until the 1980s France had not experienced the non-indexing of wages with prices. As Erik Izraelewicz commented, "With the end of the widespread indexing of incomes, the governments of M. Mitterrand were to revolutionize France."⁸⁷

The American model of a free economy, with a more restricted public sector role, went generally against this philosophy. This difference was particularly evident in the manner of looking at "counterpart funds": those funds that accumulated as the result of sales by the French government to French buyers of American products received through the interim aid or later through the Marshall Plan. From the French side, the impulse was for free access to these counterpart funds. However, the American negotiators, such as the young and gifted "Tommy" Tomlinson (who died shortly thereafter at the age of thirty-five), wanted to see a large proportion of these funds frozen. The spigot would be opened only to prevent a recourse on the part of the government to the Bank of France. It was necessary to avoid such a recourse because the French reserves were dangerously low. At heart, Jean Monnet was not against this approach. He wanted the counterpart funds to be used for purchases of equipment in the framework of his modernization plan and not for the current expenses of the government.

The American philosophy behind this aid program was clearly antiinflationary, as put forth in a document prepared for the occasion of a visit by President Vincent Auriol in 1951: "We believe that only by means of an increase in essential imports into France can US financial aid serve to provide increased local currency resources for the French Government. Such imports, by absorbing purchasing power, will serve as a most effective device to combat rising prices."⁸⁸

At the same time the American position was that economic aid should not be offered to a country where it would have the effect of increasing that country's monetary reserves--unless the refusal of aid would damage the country's defense effort. ⁸⁹

The document prepared for the Auriol visit, with its emphasis on defense, was written three years after the affair of interim aid to France. In the meantime the French defense capability had grown considerably, due to the revolt in Indochina and the Soviet threat that brought about the North Atlantic Treaty in 1949 and the integrated NATO defense system in 1950. France's increasing role in defense, specifically in the defense of Europe in the 1950s, is the subject of the next chapter.

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